Section 179 of the Tax Code -
Your Boat as a Business
I WANTED TO SHAREWITH YOU THAT WE STILL HAVE 45 DAYS LEFT TO TAKE ADVANTAGE OF SECTION 179 TAX BREAKS!
Charter Boatonomics 101
How you can own a new boat, significantly offset of your cost, and save a fortune in taxes AND YES, HAVE FUN!
In this email, I'll give you an overview of how you can accomplish everything on the statement above. If in my efforts to be brief, if anything isn't clear or if you would like more detail, please feel free to give a call and I'll gladly go into more detail with you.
Let's make this real right from the beginning. Owning a charter boat isn't going to make you rich. Some boats do better than others, but at CYC our goal is to only put boats into our fleet, which will be economically, viable. That usually means your boat pays its way, covering all of its expenses, debt service, and generating strong positive after-tax cash flow. If you place a boat with us, it's likely going to be a long-term relationship, from 3-10 years, so we want this to be a "win/win." With those expectations in mind, here are some general selection rules to help you choose the right boat for you:
1. Choose the boat you want to own - I can often tell you how one model did vs. another in the past, but I can't predict the future. Frankly, the difference in economic performance isn't usually sufficient to justify purchasing one boat over another, especially if it means you're buying a boat you don't want. A very big benefit to our program is that it lets you use charter income and tax savings to pay for a substantial portion of the cost of buying your new boat. Check out Section 179 and see the great benefits that can be yours now
2. Think like a charter client - Let's say you want to have a long weekend getaway in Catalina and want to take another couple with you. This is a popular type of charter and most couples will want privacy. They'll choose a yacht with two large staterooms, each with their own head. There are plenty of markets to be addressed. Call me and I'll fill you in on the models that best fit your desires.
3. Middle market boats - Chartering requires credentials and more folks have basic to mid-level credentials than the higher certification levels. In other words, it's a classic pyramid. To hit this market hard, I have developed certain models that do significantly better than others. Any of theses models will be well received in the charter market.
4. Up and Coming Boats - Let's talk Bali Catamaran's, and Mono-hulls, because the destination charter companies are becoming very Cat centric and with captains on board with customers they are gaining excellent popularity. We have access to the Bali brand with models in the 4.0 to 5.4 foot range. In addition to the Bali Catamarans we offer a complete line of mono-hulls from Jeanneau, Elan, and Tartan that have been well accepted in the charter industry. Call me and lets discuss the reasons why there is an attraction and features that suit different desires.
Financing Your Boat
I was reading a financial newsletter the other day that stated home mortgage rates are still at historic lows. Boat loan rates are also at some of the lowest they've ever been and are running as low as 4.00% to 4.50% based on FICA score.
These are not "teaser" rates. They are fixed for the full 15-20 year term of the loan and there are no points, fees, or prepayment penalties. And yes, we can help you get these rates through our own financing contacts.
Chartering Your Boat
This part is really important! There are several major ways to go about this and I'll cover them from worst to best:
1. Do It Yourself - This is an exercise in frustration and if you get audited (very likely), I can practically guarantee you'll lose. I won't belabor why here, but you can call me if you want details.
2. Place Your Boat In The Caribbean - Or Med, or South Pacific, etc. If your goal is to have some great vacations by trading boat time, this is a good plan, but the tax benefits were pretty much done away with in 1986. Also, beware of resale value. Not only are these boats "charter-centric," (too many cabins and too vanilla), but there's usually a lot of them for sale and very time consuming to get to locations resulting in low resale values.
3. Place Your Boat With CYC - You'll get a new boat, fully equipped for charter with no surprises, from the world's largest and most experienced boat builders, complete with new boat warranty and managed by a new charter club with years and years of experience in southern California packed with enthusiasm and fresh ideas. You also get a program that offers real profit potential, huge tax deductions, positive cash flow and the ability for you to be "actively" (see #4 below) involved in managing your charter boat business. Additionally, you get free training, free club membership and priority treatment in the use of your boat.
4. Do Your Homework! - I was recently speaking with a client who bought a boat in the Caribbean. As he described all of the terrific tax benefits he would be receiving, I had to bite my tongue because he had been seriously misled. Overseas charter boats are defined in the tax code as "passive investments," which means the deductions can only be used to offset passive income.
The deductions generated with CYC's program can offset "active" or ordinary income. Call to request a free, 9 page report written by tax accountant, Nick Tarlson, which explains all of the ins and outs of the tax benefits.
We're now well into the "just in time" phase of 2017 tax planning, because your boat must be in service by December 31st to reduce your 2017 tax bill. As of this writing, there are still have a few models available for delivery this year, but don't wait. Call now for the latest update.
To learn more about how what we've covered here can work for you, give me a call and we'll set up a meeting so you can get all the details you need to make an informed decision. You'll learn why my client list includes CPAs, attorneys, and other tax professionals and why CYC's boat ownership program will be the best possible way to make boat ownership pay for itself.
Buying a Boat does not have to be just an expensive luxury for a few; learn what others are experiencing with positive cash flow and massive tax deductions. And if it is not a fit for you then we will discover that also.
Here is our current list of boats available for SECTION 179